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03-05-2023, 12:07 AM
PacWest Bancorp and Western Alliance Bancorp each slumped more than 25% Tuesday, leading a renewed selloff in regional lenders as investors continued to gauge the health of the industry after the second-largest US bank failure ever.
Trading in shares of both banks were halted for volatility, amid the broader slide that took the KBW Regional Banking Index down as much as 6.1%, the most intraday since March 17. Comerica Inc. and Zions Bancorp. each fell more than 10%, while Charles Schwab Corp., the brokerage with a bank arm that’s come under pressure in the wake of the regional banking tumult, sank 5.3%.
The sector’s retreat comes a day after First Republic Bank’s seizure and sale to JPMorgan Chase & Co., and underscores investors’ ongoing concerns about competitors of the four banks that have collapsed since early March. The slide has now taken the regional banking gauge down 28% this year.
JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon was quick to proclaim the current leg of the banking crisis “over” during a conference call discussing his bank’s acquisition of First Republic on Monday. He recommended everyone “just take a deep breath” even as higher interest rates and stress on the commercial real estate industry pose a threat to the banking sector.
“While FRC resolution is a good sign, we haven’t had a clear solution to the lack of confidence across regional banks and may need a more holistic response from regulators or the government,” Bloomberg Intelligence analyst Herman Chan said in a message.
Western Alliance and PacWest are among a number of regional banks investors zeroed in after Silvergate Capital Corp., SVB Financial Group and Signature Bank collapsed in quick succession and demonstrated the threat posed to commercial lenders by asset-liability mismatches and uninsured deposits.
But both companies posted earnings results in April that appeared to appease investors, with both firms indicating their deposit bases had stabilized or recovered after initial outflows in March.
“It looks like JPMorgan’s deal for FRC gave us one day of calm for the banking sector. Regional banking stocks are still looking vulnerable until we see clear signs that emergency lending programs can go away,” said Ed Moya, Oanda senior market analyst. “Wall Street is wondering which bank could be the next one that needs a rescue and that is making it easy to pick on the other regional banks.”
Trading in shares of both banks were halted for volatility, amid the broader slide that took the KBW Regional Banking Index down as much as 6.1%, the most intraday since March 17. Comerica Inc. and Zions Bancorp. each fell more than 10%, while Charles Schwab Corp., the brokerage with a bank arm that’s come under pressure in the wake of the regional banking tumult, sank 5.3%.
The sector’s retreat comes a day after First Republic Bank’s seizure and sale to JPMorgan Chase & Co., and underscores investors’ ongoing concerns about competitors of the four banks that have collapsed since early March. The slide has now taken the regional banking gauge down 28% this year.
JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon was quick to proclaim the current leg of the banking crisis “over” during a conference call discussing his bank’s acquisition of First Republic on Monday. He recommended everyone “just take a deep breath” even as higher interest rates and stress on the commercial real estate industry pose a threat to the banking sector.
“While FRC resolution is a good sign, we haven’t had a clear solution to the lack of confidence across regional banks and may need a more holistic response from regulators or the government,” Bloomberg Intelligence analyst Herman Chan said in a message.
Western Alliance and PacWest are among a number of regional banks investors zeroed in after Silvergate Capital Corp., SVB Financial Group and Signature Bank collapsed in quick succession and demonstrated the threat posed to commercial lenders by asset-liability mismatches and uninsured deposits.
But both companies posted earnings results in April that appeared to appease investors, with both firms indicating their deposit bases had stabilized or recovered after initial outflows in March.
“It looks like JPMorgan’s deal for FRC gave us one day of calm for the banking sector. Regional banking stocks are still looking vulnerable until we see clear signs that emergency lending programs can go away,” said Ed Moya, Oanda senior market analyst. “Wall Street is wondering which bank could be the next one that needs a rescue and that is making it easy to pick on the other regional banks.”
